TSLA - UP or DOWN?If there's one stock I had to name for being the most unpredictable, it's TESLA ( NASDAQ:TSLA ). This rather volatile stock is expected to have some pretty big moves going into market close today as the company will be holding their annual shareholder meeting at 4:30 p.m. ET.
...But wait...there's more!
Once the meeting is over, the company will immediately follow up with their highly anticipated Battery Day event, which will be used to show those in attendance what's new with TSLA batteries and what improvements could be coming to make their batteries more energy efficient.
So what does this mean for the stock?
Well, for one, TSLA is a volatile stock, so major events like these... only increase implied volatility since everyone is expecting a big move either up or down. Second, The stock is trading dead smack in the middle between its recent highs and lows... the lows being most recent of the two.
So, taking advantage of volatility is the way to go. Options traders can benefit from inflated options prices due to higher implied volatility by being option sellers. Strategies like Short Iron Condors, feature both, a capped risk and reward profile. Setting your strike selections near the recent highs and lows could be one way to trade TSLA... but the problem is that the inner strike are so wide making the risk to reward ratio very high. You can also sell credit spreads.
To trade directionally, means to either go long calls or puts... Since Volatility is high, these strategies tend to be more expensive near major announcements. If you nail it, good for you. If you dont, then know that you can't lose more than what you paid for. If you still want to trade directionally, but want to minimize the risk, you can do debit spreads. This involves buying an option which will serve as your directional trade, and then selling that same type of option a few strikes further away to bring in some credit. This option might be good if you think that implied volatility will only increase after the announcement.
Usually, the day following a major events, as with earnings announcements, options have been known to experience "volatility crush," in which the implied volatility drops after the news announcement. A drop in implied volatility can affect an option's price even more so than the movement of the underlying stock price. Therefore, directional neutral trades such a long straddles, will need to have a large move in the underlying in either direction to outpace the potential drops in implied volatility the next day.
Which strategy will you choose? Remember...choosing not to trade can also be a wise trading strategy.
Calls
Target - Pullback tradeThe markets have been selling off over the past few days, leaving most of the sectors in the S&P 500 in the red. A stock that caught my eye today was Target. The discount store's stock prices have been trading near it's 21 day exponential moving average only dipping beneath it temporarily throughout intraday trading sessions. Despite the warning signs of what could be another big sell off, I choose to remain bullish on TGT and consider this to be a pullback trade setup. Of course, we might see price dip below the 21 as it has in the past...but that doesn't seem to be more than a day or two. If it does... then consider the possibility that Target is reversing rather than pulling back.
Options speculators should consider the chance of a broad market selloff and at think about using spreads rather than directional plays. If you are trading the stock, plan your trade and trade your plan. Only you know what you can afford.
AAPL to $130 or $110Labor days future action seems pretty bullish with world markets very green. AAPL had a hammer candle followed by an engulfing green candle (bullish), followed by a 3 bar play with a continuation green candle (bullish). We did however hit some resistance. If this trend continues, we should very quickly test $130 with a short squeeze, and possibly back to ATH. On the downside, if shorts come back into play, we will probably see $110. Hedge yourself on those calls.
Home Depot pulls back to the 13 EMAHome Depot ( NYSE:HD ) is pulling back along with the Dow today and is finding support at the 13 Day EMA as shown on the chart above. Could this be a pullback trade? I would like to think so, but as the SPY soars to new highs, we continue to be in an overextended market. I think Home Depot has the potential to continue higher provided that the SPY or DOW doesn't sell off. Even though SPY is made up of many other companies that have nothing to do with Home Depot, there is still market risk (also known as beta risk, systematic risk, undiversifiable risk) which is the risk that the stock will move along with the broader market.
I will continue to monitor Home Depot to see if today's idea was a bullish pullback trade.
UPS BULLFLAG PT $178UPS just formed a Bull flag that if broken to the top should propel the stock to around $178. I do see the possibility of this consolidation to the lower end of the channel which would be $155. If that is broken, we can definitely see UPS work its way down the engulfing candle and find support with a bounce around $145. There is also a MASSIVE gap that needs to be filled around $124 and 134. Manage risk
BYND signaled a little while back and finally looking decentBYND has a target at $162. It's looking pretty decent here for a run. May not hit if it runs here. Could take another leg up before closing the books on this signal. Ready to trim on a spike and rebuy on a dip. this is like learning to surf the market waves lol
$AMD PT $91-$93 then to $100AMD is that darling that continues taking share from Intel. We have formed a bull pennant with an inside CH. Appears friday we hit the top of the handle. We need to break that $84-81 range to get continuation to my $93 target. This will then get picked up once again by robinhooders and should propel it beyond $100. My top price (which is insane) is $111 which ends up being exactly the 2.618 Fib extension level. Be ready!! the NVDA drive should start waking people up for AMD. Tread lightly though as i am anticipating a pullback in the market either this week or next.
Applied Materials - Bullish pullback trade ?Applied Materials ( NASDAQ:AMAT ) has an interesting chart in that it tends to pull back below the 21 EMA on the daily chart. I tried to identify a clear area of support for each pullback, but it seems arbitrary. You can see the Keltner Channel falls just short of where the stock reverses the second time and the most recent pullback is actually pulling back to the 34 EMA which I initially did not want to put on my chart to avoid too many lines... but I figured, seeing is believing, so I put a big fat orange line to add to the chart.
AMAT is an upward trending stock and has decent volume...approx 5 million shares traded today...I sorted the S&P 500 constituents by volume and AMAT was #19 in volume (#1 being highest volume which was GE). I did see other stocks that were pulling back as well, but something about their charts didn't convince me.
OK prediction time... so based on what I see on the charts I think we might see AMAT find support at $62.65 ... from there I think its going to ride back up. It is oversold based on the 60 min time frame, but not quite there on the daily time frame... so keep an eye on it tomorrow. If it comes down to $62.65 or to the lower Keltner channel band I wouldn't be surprised... but be wary if it breaks below that. Those considering to go long now, might be a little early...or could be lucky and end up hitting it right on the nose because it doesn't tend to stray too far below the 21 EMA and today's red candle was a decent size.
LONG TUP, this thing is gonna POP like a tupperware bowlClear bull pennant, Target 20+ easily, get in on TUP now
9/18 ATM calls are cheap and should profit nicely